Energy companies should be investigated by the Competition Commission, after
five of the big six cut their prices within days of each other and by a
similar amount, the country's leading watchdog has said.

Consumer Focus said energy companies moved their prices at the same time, lowering competition in the marketPhoto: PA

Consumer Focus, the official watchdog in charge of representing gas and electricity customers, said it had serious concerns about whether consumers were getting a fair deal on their energy bills.

Its concerns come after five of the so-called "big six" have announced that they were cutting their gas bills by between 4 per cent and 8 per cent, all of which come into effect within five days of each other at the end of this month. The price cuts were announced in recent days after months of pressure from campaign groups, who have argued that householders, especially pensioners, have suffered from high bills during the coldest winter in 30 years, while energy companies have profited from falling wholesale costs.

This week's announcements follow an almost identical pattern of pricing movements that took place last year.

Both times, British Gas was the first company to announce a cut in February. There was then a pause before the remaining five suppliers – Scottish and Southern Energy, E. ON, Npower, Scottish Power and EDF – followed by cutting gas or electricity bills by between 3 per cent and 9 per cent. The price cuts last year came into effect on either March 30 or March 31.

Robert Hammond, gas expert at Consumer Focus, said: "They behave like an oligopoly. It's a herd mentality. How can there be serious competition when they all change their prices at nearly identical times and by about the same amount. That's the rub of it."

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His organisation has called upon the Competition Commission to investigate.

The previous year, in 2008, five of the big six raised their prices within a month of each other by between 13 per cent and 17 per cent.

Consumer Focus's call comes just a month after Ofgem, the industry regulator, raised serious concerns about how the market was treating customers when it revealed that the average annual profit that each company was making equated to £105 per customer.

"Ofgem continues to have concerns about whether the retail energy supply market is yet working enough in the interests of all consumers," it said.

"The Big 6 suppliers‘ pricing patterns tracked one another closely. Information we gathered from suppliers‘ business plans confirmed that they pay close attention to the pricing levels of their competitors. While we found no evidence of a cartel, we noted signs of leader-follower behaviour, with British Gas frequently acting as first mover."

Despite the recent cuts the average dual fuel energy bill – both gas and electricity – is £1,230. This is 6 per cent cheaper than a year ago, when they hit a record of £1,303, but considerably higher than the £912 average of two years ago.

Campaigners have argued that over the 18 months, though bills have fallen by 6 per cent on average, wholesale energy prices – the price the suppliers have to pay for their supply – have fallen by 50 per cent and that consumers have not enjoyed nearly enough of this benefit.

The energy companies insisted the similar pattern of their price cuts or rises did not mean consumers lost out.

Peter Jenkins, spokesperson at Energy UK, which represents the main gas and electricity suppliers, said: "The energy regulator, Ofgem, has confirmed that Britain has one of the most competitive energy markets in the world, with around five million customers switching supplier each year. The Government has also recently found that British customers pay some of the lowest prices in Europe for gas and electricity."